The Kyoto-based videogame maker also offered an even bleaker outlook for its full-year earnings for the year to March, saying Thursday that net losses will be three times greater than its projections in October as valuation losses on foreign-currency holdings from the strong yen continued to swell.
The loss comes as Nintendo is replacing aging videogame machines with new ones, while trying to beat back the tides of technological change washing over the industry. After watching the once world-beating Wii's popularity slow, the company has announced plans to introduce a successor, the Wii U, this year. Last February, it introduced the 3DS, a hand-held game system with the ability to play 3-D games without the need for special glasses, but the initial consumer response was weak.
To kick-start demand for the new device, Nintendo slashed the price of the 3DS by 40% in August. In the run-up to the holiday shopping season, Nintendo introduced 3DS versions of two popular game franchises, with "Super Mario 3D Land" and "Mario Kart 7."
Nintendo doesn't break out figures on a quarterly basis, but price cuts made to its 3DS and some new software titles sparked some demand for the portable game machine during the three months ended December. Based on calculations from Nintendo's figures, it sold 8.36 million 3DS units during the October-December period, or more than the company had sold in its previous three quarters combined.
But it still fell short of Nintendo's expectation. The company said it is now targeting sales of 14 million 3DS units, short of its October target to sell 16 million, for this fiscal year. For the Wii, it is now projecting sales of 10 million units, a 20% reduction from its prior estimates.
Nintendo is also contending with smartphones and tablet computers offering simple-to-play games at a fraction of the price of games available on dedicated game machines such as the 3DS.
For the first nine months of the year, Nintendo said it posted a net loss of ¥48.35 billion ($621.6 million) in the nine months ended Dec. 31, compared with a profit of ¥49.56 billion in the year-earlier period. Revenue fell 31.2% to ¥556.17 billion while it fell into the red on an operating basis with a loss of ¥16.41 billion.
For the full-year ending March, Nintendo said it expects a net loss of ¥65 billion on revenue of ¥660 billion. It had been projecting a loss of ¥20 billion yen from revenue of ¥790 billion.
Compounding Nintendo's losses is a stubbornly strong yen. The Japanese currency is hovering near records. Nintendo keeps much of its cash in foreign currencies, so the yen's rise inflates the paper losses on its reserves. Similarly, the company also incurs paper gains when the Japanese currency weakens.
The company said it incurred foreign-exchange losses of ¥53.7 billion for the nine-month period. Nintendo changed its foreign-exchange rate expectations for this fiscal year, lowering its assumption for the euro to ¥98 from ¥106. For the dollar, it maintained its assumption at ¥77.
read more: Olympus Wealth Management
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